ConTech and why you should care
A few months ago, Autodesk announced the purchase of construction tech startup PlanGrid for $875 million, one of the biggest acquisitions in the ConTech space to date in the Construction following a massive acquisition of Aconex of $1,2Bn lead by Oracle and significant investments in Katera by Softbank. In all respects, we are seeing a consolidation and increase in investmetns even from outside the industry, which is a leading indicator of the potential of this industry catering for 14% of the worlds GDP, and why this is the place to be IMHO.
What is ConTech?
There are plenty of definitions of the term out there. Some of these are broad, others narrow it down to just the actual construction process. In reality, there is a lot of overlap between construction and management (as we will discuss) and it is impossible to consider ConTech siloed away from the rest of technological innovation in the built environment. I like to define ConTech as the technology used to innovate the way we plan, design, and build structures, as well as the manufacture and installation of their components.
ConTech vs. proptech?
We've integrated Facility Management and Asset Management into our MTWO Cloud as a 6D and 7D, but what is the difference an why care? This is a topic of contention for many. I absolutely believe that ConTech is, indeed, proptech, due to the overlap that naturally arises between the two. The best example I can give for this is BIM. Building Information Modeling or BIM, according to Autodesk (one of the leading providers of BIM technology and a partnership of RIB in our "BIM Spotify where we stream BIM data between REVIT and iTWO) "is an intelligent 3D model-based process that gives architecture, engineering, and construction (AEC) professionals the insight and tools to more efficiently plan, design, construct and manage buildings and infrastructure." BIM itself is not proptech, as it is just a process, but the models that derive from it definitely are. For example, maintenance for buildings that have been built in BIM can be efficiently managed using AI and AR thanks to the accurate 3D models and centralized data.
What kind of tech goes into ConTech?
One of the biggest pet peeves for those in the ConTech space is that, when they hear the words construction technology, people often think only of the basic 3D printed house that was all over the Internet in 2018. 3D printing is definitely a very interesting part of ConTech, and in future, perhaps, entire buildings will be extruded from gigantic printers in mere hours. For the time being, however, prefabrication, which in of itself is nothing new as it's been around for decades in some form, is a much more realistic way in which players in the space are starting to move away from traditional methods of construction.
The biggest gains in the space are currently being had in the management of construction processes, even when traditional methods are used. PlanGrid, for example, digitalizes construction workflow processes. There are startups that utilize AI for workflow management, others that deploy sensors throughout the construction process and provide a platform for management of that data. Drone technology is being deployed together with machine learning for job site analysis. Robots are tentatively starting to be used for repetitive on-site tasks. Wearable tech is used for worksite safety, and as we discussed before, AI analytics and AR will make the difference in the management of structures designed and built in BIM. We will delve into these applications and the startups innovating these fields in an upcoming post.
On top of which, you have RIB where we harness and ultilises all these on a platfrom (MTWO) where we crate a eco-system of technology and applications fundamentally bringing together all data-sources and data via a connected approach. With connected we are a talking vitual and physical stakeholders across the whole supply chaing.
Marvelous, this means taht we connect our robots in the assembly line in pre-fab factories allowing them to talk and negotiate between them selves in stead of being ”dumb”. We offer the people from differet companies and trades transparency and visibility on the job needed done, so they can mindfully reduce waste and perform better. Just two examples of many, but you get the picture.
How big is the market for ConTech?
In one word - huge. the global construction industry was estimated to be worth over $17 trillion in 2018 and is forecasted to exceed $24 trillion in 2021. It is also an industry that is very much behind the curve in terms of innovation, especially with regards to construction methods. As we saw above, though there are significant advances being made around design and workflows, the actual construction still largely relies on traditional methodologies, with the exception of off-site manufacturing. 3D printing is still very much in the experimental "PR stunt" phase. Some estimate that even using only the ConTech tools we already have, widespread adoption would mean a sector productivity increase of 40%.
If the market is so big, then why is ConTech still so relatively small?
Construction is a complex business. There are a lot of stakeholders at play: owners, designers, engineers, contractors, subcontractors, site labor, operators, regulators, planners, local government, the public... the list goes on. When you build, you build something that needs to last for decades, at least. It is much easier to sell a management platform to a real estate portfolio (they and they alone decide how they want to manage their assets, after all) than it is to drive change in construction methods which, if not up to scratch, can have devastating consequences culminating in the loss of lives.
Though this is a limitation, it also presents a huge opportunity. The gains to be had from innovating this massive and mostly untouched sector are enormous. Engendering disruptive change in construction is going to be challenging as it will require a multitude of conservative stakeholders and regulators to buy into it. Investment lead times will be long and the sums required will be high, but I suspect the returns will be enormous. Exits such as PlanGrid to Autodesk, Viewpoint to Trimble and Aconex to Oracle are just the beginning. With powerhouse platfroms emerging, like Autodesk and AWS partnering up on A360 offering a design-cloud, our initiative with Microsoft offering a vertical cloud from Design to ERP, and potential PLM players, we are seeing a significant change from products and silos into platforms. ConTech is changing from App’s to eco-systems.